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Information required in proxy statement.
Section 240.14a-101
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on June 10, 1998
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
American Craft Brewing International Limited (the "Company") will be held at the
East Bank Regional Library at 4747 West Napoleon Avenue, Metairie, Louisiana
70001 on Thursday June 10, 1998 at 10:00 a.m., local time, for the following
purposes:
(1) To Elect six (6) directors to the Board of Directors;
(2) To approve a certain amendment to the Company's 1996 Stock Option
Plan: (a) to increase the number of shares of Common Stock reserved for issuance
thereunder by an additional 400,000 shares to a total of 1,000,000 shares;
(3) To vote on a proposal to increase the authorized shares of common
stock to 75 million shares.
(4) To vote on a proposal to ratify the selection of independent
auditors; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 13, 1998
as the record date for the determination of stockholders entitled to receive
notice of, and to vote at, the meeting and any adjournment thereof. From April
13, 1998 to June 10, 1998, during ordinary business hours, a list of such
shareholders shall be available for examination by any stockholder for any
purpose germane to the annual meeting at the offices of the Company.
Your attention is directed to the Proxy Statement submitted with this
Notice.
By Order of the Board of Directors,
JAMES L. AKE
Executive Vice President, Chief Operating
Officer and Secretary
Metairie, Louisiana
April 22, 1998
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY.
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
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PROXY STATEMENT
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The enclosed form of proxy is solicited by the Board of Directors of
American Craft Brewing International Limited (the "Company") for use at the
annual meeting of stockholder to be held at the East Bank Regional Library at
4747 West Napoleon Avenue, Metairie, Louisiana 70001 on June 10, 1998 and any
adjournment thereof. When such proxy is properly executed and returned, the
shares it represents will be voted as directed at the meeting any and
adjournment thereof or, if no direction is indicated, such shares will be voted
in favor of the proposals set forth in the notice attached hereto. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted. Revocation of a proxy is effective upon receipt by the Secretary of the
Company of either (i) an instrument revoking such proxy or (ii) a duly executed
proxy bearing a later date. Furthermore, if a stockholder attends the meeting
and elects to vote in person, any previously executed proxy is thereby revoked.
Only stockholders of record as of the close of business on April 13, 1998
(the "Record Date") will be entitled to vote at the annual meeting. As of that
date, the Company had outstanding 3,796,876 shares of common stock, $0.01 par
value ("Common Stock"). Each share of Common Stock is entitled to one vote. No
cumulative voting rights are authorized, and appraisal rights for dissenting
stockholders are not applicable to the matters being proposed. It is
anticipated that the Proxy statement and the accompanying proxy will first be
mailed to stockholders of record on or about April 20, 1998.
Votes cast by proxy of in person at the annual meeting will be tabulated by the
inspector of elections appointed for the meeting who will also determine whether
a quorum is present for the transaction of business. The Company's Bye-laws
provide that a quorum is present if the holders of a majority of the issued and
outstanding capital stock of the Company are present in person or represented by
proxy at the meeting. Abstentions and broker "nonvotes" will be counted as
present I determining whether a quorum requirement is satisfied. A broker
"nonvote" occurs when a broker holding shares for a beneficial owner votes on
one proposal pursuant to discretionary authority or instructions from the
beneficial owner, but does not vote on another proposal because the broker has
not received instructions from the beneficial owner and does no have
discretionary power. Proposals must receive the affirmative vote of a majority
of the votes cast for approval. An abstention from voting by a stockholder and
broker "nonvotes" are not counted for purposes of determining whether a proposal
has been approved.
PROPOSAL 1- ELECTION OF DIRECTORS
Management of the Company and the Board of Directors of the Company (the
"Board of Directors") recommend the election of the nominees listed below for
the office of director to hold office until the next annual meeting and until
their successors are elected and qualified or until their earlier resignation or
removal.
The Board of Directors has no reason to believe that any of the nominees
for the office of director will not be available for elections as a director.
However, if at the time of the annual meeting should any of the nominees be
unable or decline to serve, the persons named in the proxy will vote for such
substitute nominees, vote to allow the vacancy created thereby to remain open
until filled by the Board of Directors of vote to reduce the number or directors
for the ensuing year, as the Board of Directors recommends. In no event,
however, can the proxy be voted to elect more than ten (10) directors. The
election of the nominees to the Board of Directors requires the affirmative vote
of a majority of the votes cast at the meeting.
Set forth below are the nominees for election to the Board of Directors.
Also set forth below as to each nominee is his age, the year in which such
nominee was first elected a director, a brief description of such nominee 's
principal occupation and business experience during the past five years,
directorships of certain companies presently held by such persons and certain
other information, which information has been furnished by the respective
individuals.
PETER W. H. BORDEAUX
Age 49
Director since 1996
Mr. Bordeaux has been Chairman of the Board of Directors of AmBrew
International since June 5, 1996 and has been associated with its subsidiaries
since August 9, 1994. Mr. Bordeaux has been President and Chief Executive
Officer of AmBrew International since February 12, 1997. Prior to his
employment in these positions and since 1982, Mr. Bordeaux was President and
Chief Executive Officer of New Orleans-based Sazerac Company, Inc. ("Sazerac"),
the tenth largest United States producer, importer and exporter of spirits as
well as a large U.S. distributor of wine, beer and non-alcoholic beverages. Mr.
Bordeaux had been with Sazerac since 1980. In addition, Mr. Bordeaux had served
as Chairman of Concorde Holdings ("Concorde"), since November 1994, and had
served as President, since September 1992, of Leestown Company, Inc., which owns
the world's largest bourbon distillery. Mr. Bordeaux was Vice Chairman of the
Board of the National Association of Beverage Importers, is presently a Board
Member, Vice President and member of the Executive Committee of the Board of the
World Trade Center, New Orleans, Chairman of the International Advisory Council
of Hibernia National Bank (New Orleans) and a Board Member and Treasurer of
Episcopal Housing for Seniors, Inc.
CORNEILUS DUPRE'
Age 46
Director since 1998
Mr. Dupre' was appointed to fill an existing vacancy in the Company's
Board of Directors by the incumbent Board in March 1998. Since 1982 Mr. Dupre'
has served as Chief Executive Officer and Managing Director of Dupre' Supply
Company and Dupre' International, oil service supply companies that were founded
by Mr. Dupre'. Mr. Dupre' received a Bachelors of Science from Louisiana State
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University in 1977, a Masters of Business Administration from Northeast
Louisiana University in 1980 and a Juris Doctorate from Louisiana State
University in 1980. Mr. Dupre' is a member of the Louisiana State Bar, and a
member of the American Petroleum Institute.
MARK HALPERN
Age 45
Director since 1998
Mr. Halpern was appointed to fill an existing vacancy in the Company's
Board of Directors by the incumbent Board in March 1998. Since 1993 Mr. Halpern
has served as President of Brittany Sales, a marketer and seller of wine and
spirits, and Brittany Imports, a wine and spirit importer, which were founded in
1970 by Mr. Halpern's father. Mr. Halpern is also member of the Board of
Directors for Brittany Imports and Brittany Sales Company, both being private
companies. Additionally, Mr. Halpern is a member of the Board of Governors for
the Sylvester Comprehensive Cancer Center in Miami and a member of the Keepers
of the Quaich (Scotland).
PAULA O'CONNOR
Age 48
Director since 1998
Mrs. O'Connor was appointed to fill an existing vacancy in the Company's
Board of Directors by the incumbent Board in March 1998. Mrs. O'Connor is a
Certified Public Accountant and since March 1994 has held the position of
Financial Consultant with Merrill Lynch and Company. From January 1998 to
August 1993 Mrs. O'Connor served as Chairman of the Washington State Liquor
Control Board. Additionally, during the period from 1993 to 1996 Mrs. O'Connor
served as a director of the American Institute of Certified Public Accountants.
STEVEN A. ROTHSTEIN
Age 47
Director since 1997
Mr. Rothstein was appointed to fill an existing vacancy in the Company's
Board of Directors by the incumbent Board in March 1997. Mr. Rothstein has been
the Chairman of the Board of National Securities Corporation, a securities
broker-dealer, since 1995. Mr. Rothstein also is Chairman of the Board and
President of Olympic Cascade Financial Corporation, the parent holding company
of National Securities Corporation. From 1994 to 1995, Mr. Rothstein served as
a Managing Director of H.J. Meyers & Co., a securities broker-dealer. From 1992
to 1994, he served as a Managing Director of Rodman and Renshaw, a securities
broker-dealer. From 1989 to 1992, he served as a Managing Director of
Oppenheimer & Co., a securities broker-dealer. Prior to that, he was a limited
partner of Bear Stearns & Co., a securities broker-dealer. Mr. Rothstein
received a BA degree from Brown University. He is currently a director of
SigmaTron International, Inc., New World Coffee, Inc., and Vita Food Products,
Inc. and Gateway Data Sciences Corporation.
3
STEVE TEBO
Age 41
Director since 1998
Mr. Tebo was appointed to fill an existing vacancy in the Company's
Board of Directors by the incumbent Board on February 19, 1998. Mr. Tebo is the
President and founder of Castle Development, Ltd., a consulting firm. During the
past five years Mr. Tebo has held the same position.
OPERATION OF THE BOARD OF DIRECTORS
The Company has a Compensation and Stock Option Committee of the Board
of Directors that is composed of Messrs. Tebo and Dupre'. The Compensation
Committee is responsible for establishing and administering the overall
compensation policies and determining compensation matters applicable to the
Company's senior management and other key officers. The Compensation Committee
was formed just prior to the Company's Initial Public Offering in September 1996
(the "Offering") and held three meetings during fiscal 1997. The Compensation
Committee may exercise such additional authority as may be prescribed from time
to time by the Board of Directors.
The Audit Committee of the Board of Directors is composed of Messr.
Halpern and Mme. O'Connor. The Audit Committee was formed just prior to the
Offering and held one meeting during fiscal 1997. The Audit Committee is
responsible for meeting with the Company's auditors at least annually to review
the Company's financial statements and internal accounting controls. The Audit
Committee will also be responsible for submitting recommendations to the Board
of Directors regarding the Company's internal accounting controls and may
exercise such additional authority as may be prescribed from time to time by the
Board of Directors.
The Company does not have a nominating committee.
In fiscal 1997, twelve meetings of the Board of Directors were held. The
Board of Directors also took action during 1997 pursuant to two unanimous
written consents without meetings.
DIRECTOR'S COMPENSATION AND EXPENSES
Each non-employee director will receive 100,000 warrants per year issued
at 25,000 warrants per calendar quarter as compensation for their services. The
exercise price will be set at the average ending price of the first ten days of
trading in January of each fiscal year.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the annual
meeting is required to elect the Company's Nominees to the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO.1
4
COMMON STOCK OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of January 23, 1998 (i) of each
person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the Common Stock, (ii) of the Company's directors
and named executive officers and (iii)of all directors and executive officers as
a group.
Number of Shares
Beneficial Owner Beneficially Owned (1) Percent of Total
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James L. Ake (3) 75,000 2.0%
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
Stephen B. Armstrong (3) 16,937 0.4%
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
Peter W. H. Bordeaux (2) 338,733 9.0%
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
Federico G. Cabo Alvarez (3) 955,250 25.2%
Cabo Distributing Company
9657 East Rush Street
South El Monte, California 91733
David K. Haines (3) 380,000 10.1%
A3, 3/F, University Heights
42 Kotewall Road, Mid Level,
Hong Kong
Steven A. Rothstein (3)(4) 15,160 (5)
National Securities Corporation,
875 North Michigan Avenue, Suite 1560
Chicago, Illinois 60611
Mellon Bank Corporation 200,000 5.3%
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
All executive officers and 445,830 11.7%
Directors as a group (4 persons)(2)(3)
(1) Applicable percentage of ownership, except as described in note 2 to this
table is based on 3,796,876 shares of Common Stock outstanding as of the
date hereof. Beneficial ownership is determined in accordance with the rules
of the Commission and generally includes voting or investment power with
respect to securities, subject to community property laws, where applicable.
(2) Includes Mr. Bordeaux's vested options to purchase 133,333 shares of Common
Stock. Mr. Bordeaux's percentage of outstanding shares was calculated by
adding to the number of outstanding shares 133,333 shares deemed to be
issued pursuant to Securities Exchange Act Rule 13d-3(d)(1).
(3) Includes vested options granted under the Stock Option Plan of 1996 as
amended. The percentage of outstanding shares was calculated by adding to
the number of shares outstanding that number of shares deemed to be issued
pursuant to Securities Exchange Act Rule 13d-3(d)(1).
(4) Represents warrants to purchase 3,160 shares of Common Stock owned by Mr.
Rothstein, which warrants are exercisable.
(5) Less than 1%.
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CERTAIN INFORMATION REGARDING EXECUTIVE OFFICERS
The Summary Compensation Table below sets forth the cash compensation
earned by or paid to the Company's Chief Executive Officer, Chief Operating
Officer and certain other executives for the fiscal year ended October 31, 1997.
Only the Chief Executive Officer had salary and bonus in excess of $100,000
during the fiscal year ended October 31, 1997.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION(1)
ANNUAL COMPENSATION AWARDS OPTION LONG-TERM
NAME AND & WARRANT INCENTIVE ALL OTHER
PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) OTHER AWARDS PAYOUTS COMPENSATION
Peter Bordeaux 1997 $141,667 $50,000 $32,173 200,000 -- $1,419
Chairman, President and
Chief Executive Officer
James L. Ake 1997 $ 88,000 -- $ 8,172 75,000 -- $4,277
Executive Vice President and 1996 $ 22,917 -- -- --
Chief Operating Officer
Stephen B. Armstrong 1997 $ 59,000 -- $ 6,308 10,000 -- $ 52
Executive VP and GM
AmBrew USA
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(1) The Company has no long-term incentive compensation plans other than the
Stock Option Plan.
(2) Amounts shown include compensation deferred pursuant to Section 401(k) of
the Internal Revenue Code of 1986, as amended.
(3) The Company has no formal bonus plan and does not provide for deferred
awards. The Company may pay bonuses based on individual and Company
performance.
Set forth below as to Mr. Ake and certain significant employees of the
Company who are not members of the Board of Directors is his or her age, a brief
description of the principal occupation and business experience during the past
five years, directorships of certain companies presently held by such persons,
and certain other information, which information has been furnished by the
respective individuals.
James L. Ake, age 53, has been the Executive Vice President and Chief
Operating Officer of AmBrew International since June 5, 1996 and has been
associated with its subsidiaries since August 9, 1994. Mr. Ake was President
of AmBrew USA, AmBrew International's U.S. subsidiary, from December 1996 to
March 1998. Before joining the Company, Mr. Ake had been the Director of
Financial Analysis and Planning for Sazerac since 1993 where he was responsible
for expansion of operations overseas with emphasis on ventures in the Pacific
Rim countries. In addition, from November 1994 to June 1996, Mr. Ake had served
as Managing Director of Concorde. Prior to joining Sazerac, Mr. Ake was a
director in Zapata-Haynie Corporation in Hammond, Louisiana, where Mr. Ake was
responsible for corporate planning, oversaw profitability, and development of
various departments. Mr. Ake is a registered engineer.
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Stephen B. Armstrong, age 35, joined the Company in connection with the
Company's acquisition of AmBrew USA (formerly Atlantis Import Company
("Atlantis"). Mr. Armstrong is the Vice President of U.S. Distribution for
AmBrew International and President of AmBrew USA. Before joining the Company,
Mr. Armstrong was the founder and President of Atlantis, a national beer
importer, from 1994 through 1996. From 1992 to 1996, Mr. Armstrong served as
Vice President and Director of Sales and Marketing for Dixie Brewing Company, a
regional brewery located in New Orleans, Louisiana.
Nancy R. Hernandez, age 29, has served as the Company's Treasurer since
March 1998. She joined the Company in December of 1996 as the Company's
Controller. Before joining the Company, Ms. Hernandez was the Accounting Manager
for Tropical Export Co., a global exporter of industrial and automotive parts
and equipment, from 1993 to 1996 Ms. Hernandez had been with Tropical Export
since 1986. During 1995 and 1996, Ms. Hernandez also served as Treasurer for
Tropical Sales Ltd., a truck parts and equipment retail store. Ms. Hernandez is
a member of the New CPA Committee for the Society of Louisiana Certified Public
Accountants.
Dean McGuinness, age 25, is the General Manager of Celtic Brew LLC
("Celtic"), the Company's majority-owned brewery in Enfield, Ireland. Mr.
McGuinness has completed the intensive brewing program at the Siebel Brewing
Institute. Before joining the Company in August of 1996, Mr. McGuinness acted as
consultant and Marketing Manager for TourIT Ltd, a market research firm, where
he developed and implemented numerous marketing strategies utilizing the
Internet for promotional efforts, travel reservations, market research and
integrated information management. During 1994 and 1995 Mr. McGuinness acted as
consultant to various service management companies, including Market Research
Consultancy and the Centre for Quality Service Management. Mr. McGuinness earned
his Bachelor of Commerce and Masters of Business Studies during 1989-1994. Mr.
McGuinness is the son of Mr. Aidan McGuinness, the Company's joint venture
partner in Ireland.
PERFORMANCE GRAPH
Set forth below is a line graph comparing he percentage change in the
cumulative return to the shareholders of the Company's Common Stock with the
cumulative return of the Nasdaq Composite and of a Peer Group for the period
commencing September 11, 1996 (the date of the Company's initial public
offering) and ending October 31, 1997. Returns for the indicies are weighted
bases on market capitalization.
[PERFORMANCE CHART APPEARS HERE]
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TOTAL RETURN
ANALYSIS
9/11/96 10/31/96 10/31/97
------- -------- --------
American Craft Brewing Int'l. $100 $ 67 $ 60
Peer Group $100 $ 75 $ 63
Nasdaq Composite (US) $100 $106 $138
Source: Carl Thompson Associates www.ctaonline.com (303) 494-5472. Data from
Bloomberg Financial Markets
The Company's peer group, selected by the Company in good faith, is comprised of
five other publicly traded craft brewing companies. Pyramid Breweries, Inc;
Frederick Brewing Co.; Michigan Brewery, Inc.; Lion Brewery, Inc.; and Redhook
Ale Brewery incorporated.
CERTAIN TRANSACTIONS
In January 1997, the Company entered into a lease at a current monthly
rent of $6,625 with Corporation Calfik, a company wholly-owned by Federico G.
Cabo Alvarez, one of AmBrew International's principal shareholders, to lease a
21,443 square foot facility near the Mexico-United States border at which the
Company operates Cerveceria Rio Bravo. The lease term is five years with yearly
incremental rent increases ending on September 10, 2001 for a total operating
lease commitment over the remaining four-year period ending September 11, 2001of
$328,125. The lessor has the option to renew the lease for an additional 5
years, with a 6% increase in base rent on the first year of the option and at
least a 6% increase in base rent there after.
In January 1997, the Company obtained the U.S. distribution rights for
the Cerveza Mexicali brand from a shareholder ("the licensor"). A $250,000
deposit was placed with the licensor as a down payment on the final purchase
price to be determined by independent appraisal in June 1998. The existing
inventory was purchased from the shareholder for $114,667, and a royalty of
$0.40 will be paid to this individual on all sales through June 1998. Through
September 1997, sales of the Cerveza Mexicali brand have been invoiced and
collected by the shareholder on behalf of AmBrew USA. Certain expenses incurred
by the shareholder related to these sales are reimbursed using the cash receipts
collected by the licensor. The same shareholder holds the lease on the
Cerveceria Rio Bravo facility. Since September 1997, AmBrew USA has been
invoicing and collecting on the sales of Cerveza Mexicali.
During fiscal 1997, AmBrew International entered a joint venture with
Aidan McGuinness to operate Celtic Brew LLC ("Celtic Brew"), a brewery located
in Enfield, county Meath, Ireland. AmBrew International has a 60% interest in
the venture. Aidan McGuinness is also a partner in Twin Meadows, another joint
venture that produces beer. The Celtic Brew and Twin Meadows breweries are both
located in a building that is leased from Aidan and Mark McGuinness. Various
operating costs are shared by Celtic Brew and Twin Meadows and are allocated
between the companies.
8
In May 1997 the Company entered into a lease for a current monthly rate
of $1,050 with Aidan and Mark McGuinness. Mr. Aidan McGuinness is the Company's
joint venture partner in Ireland. The lease for the brewing facility in Dublin
has a term of 21 years, expiring in April 2018. The lessee has the option to
cancel the lease in years 5,10 or 15 during the life of the lease. Total
operating lease commitments over the period ending April 2002, the earliest date
to cancel the lease, is $52,500.
Pursuant to the Employment Agreement between Mr. Bordeaux and the
Company dated February 12, 1997, the Company agreed to loan to Mr. Bordeaux an
amount equal to $200,000 with interest payable quarterly in arrears at a rate
per annum equal to the prime rate of interest as reported in The Wall Street
Journal changing as and when such prime rate shall change. Mr. Bordeaux will be
required to repay this amount, including accrued interest, on the fifth
anniversary of the date of his Employment Agreement or upon termination of his
employment by the Company for Cause (as defined in the Employment Agreement) or
if terminated by Mr. Bordeaux, unless his employment has been constructively
terminated. As of the date hereof, the Company has loaned Mr. Bordeaux $35,000
on such terms.
Mr. Rothstein is Chairman of the Board of National Securities
Corporation, a securities broker-dealer, which performed investment banking
services in connection with the Offering. In connection with such services,
National Securities Corporation received underwriting fees and discounts.
Mr. Tebo is President of Castle Development, a consulting firm that
performed services for the Company in connection with its efforts to obtain debt
and equity financing. Additionally, the Company has entered into a consulting
agreement with Granier Holdings, Inc. ("Granier"), a consulting firm owned by
Mr. Tebo. Under the terms of the agreement Granier will provide the Company with
certain investor relations services. Granier will receive 200,000 Common Stock
Purchase Warrants ("Warrants") for services rendered. The Warrants will have an
exercise price of $0.01 and expiring on December 31, 1998.
The Company has adopted a policy whereby transactions between the
Company and its officers, directors, principal stockholders and any affiliates
of the foregoing persons are made on terms no less favorable to the Company than
could reasonably be obtained in an arms length transaction with independent
third parties, and that any such transactions also be approved by a majority of
the Company's disinterested outside directors.
PROPOSAL 2- APPROVAL OF AMENDMENT TO
THE COMPANY'S 1996 STOCK OPTION PLAN
The shareholders of the Corporation are asked to approve a certain
amendment to the Company's 1996 Stock Option Plan ("the Plan") to increase the
number of shares of Common Stock reserved for issuance thereunder.
PROPOSED AMENDMENT TO THE PLAN
The amendment would increase the number of shares of Common Stock
reserved for issuance under the Plan by an additional 400,000 shares to a total
of 1,000,000 shares. The Company believes that such options are necessary to
attract and retain the services of directors, officers and employees and to
provide added incentive to such persons through their ownership of the Company's
Common Stock.
NEW PLAN BENEFITS
The Company is unable to determine the dollar value and number of
options or shares of Common Stock that will be issued under the Amendment to the
1996 Stock Option Plan if the amendment described herein is approved to (I) any
of the executive officers, (ii) the current executive officers as a group, (iii)
the current directors who are not executive officers as a group, (iv) each
nominee for election as a director and (v) the employees who are not executive
officers as a group, because, except for non-discretionary option grants to non-
employee directors described above, options are granted on a discretionary
basis. The Company is unable to determine the benefits or amounts which would
have been received by or allocated to any such persons or group for fiscal 1997
if the amendment to the 1996 Stock Option Plan had been in effect throughout
such year.
SUMMARY OF THE STOCK OPTION PLAN
General. The following description of the Plan is a summary that does
not give effect to any of the proposed amendments. The summary, however, does
not purport to be a complete description
9
of all the provisions of the Plan. Any shareholder of the Company who wishes to
obtain a copy of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive offices in Metairie,
Louisiana.
The Plan was adopted by the Company's Board of Directors on July 18,
1996 and approved by its stockholders on that date, prior to the Company's
initial public offering. The Company reserved 300,00 authorized but unissued
shares of Common Stock for issuance under the Plan. The plan was amended on
April 22, 1998 to increase the authorized by unissued shares to 600,000. The
purpose of the Plan is to provide key employees (including officers) and
independent contractors of the Company (including its subsidiaries) with
additional incentives by increasing their equity ownership in the Company.
Options granted under the Plan are intended to qualify as incentive
stock options ("ISOs") under Section 422 of the Code. The Plan is intended to
satisfy the conditions of Section 16 of the Exchange Act pursuant to Rule 16b-3.
The Plan is administered by a committee of the Company's Board of
Directors comprised of at least two non-employee directors who are
"dissinterested" within the meaning of Rule 16b-3 (the "Stock Option
Committee"). Subject to the terms of the Plan, the Stock Option Committee has
the sole authority and discretion to grant options, construe the terms of the
Plan and make all other determinations and take all other action with respect to
the Plan.
Options are exercisable during the period specified by the Stock Option
Committee, except that options become immediately exercisable in the event of a
Change in Control (as defined in the Plan) of the Company and in the event f
certain mergers and reorganizations of the Company. Generally, options vest over
a five-year period. No option will be exercisable more then 10 years from the
date of grant (or five years in the case of ISOs granted to holders of more than
10% of the Common Stock) or after the option holder ceases to be an employee or
independent contractor of the Company; provided that the Stock Option Committee
may permit an employee or independent contractor to exercise options after such
employee or independent contractor ceases to be an employee or independent
contractor, as the case may be, in the event of certain circumstances specified
in the documentation of the grant of the option, but in no event will any option
be exercisable after its expiration date. Options are nontransferable, except by
will or the laws of intestate succession. Shares underlying options that
terminate unexercised are available for reissuance under the plan.
The per share exercise price of options granted under the Plan may not
be less than 100% of the Fair Market Value (as defined in the Plan) of a share
of the Company's Common Stock on the date of grant (or 110% in the case of ISOs
granted to employees owning more than 10% of the Common Stock).
Certain Federal Income Tax Consequences. The following is a brief
summary of the significant aspects of current federal income tax treatment of
the stock options that may be granted under the Plan. This summary does not
discuss provisions of the Code that generally limit the tax deductibility of the
Company's compensation expense.
The grant of a stock option will not result in tax consequences to the
Company or the optionee. Upon the exercise of an option and the transfer to the
optionee of shares of Common Stock, the tax treatment depends upon whether the
option is a nonqualified stock option or an ISO.
Non-Qualified Stock Options. When a nonqualified option is exercised,
the optionee will realize compensation taxable as ordianry income in an amount
equal to the difference between the option
10
price and the Fair Market Value of the shares of Common stock on the date of
exercise, and the Company will have a deductible expense in the same amount. The
optionee's basis in such shares of Common Stock will generally be the Fair
Market Value of such shares of Common Stock on the date of exercise. When the
optionee disposes of such shares of Common Stock, the difference between the
amount received and the Fair Market Value of the Common Stock on the date of
exercise will be treated as long-term or short-term capital gain or loss,
depending upon the optionee's holding period for the shares of Common Stock.
However, whe a person subject to Section 16(b) of the Securities Exchange Act
acquires shares of Common Stock upon the exercise of nonqualified stock option,
the ordinary income and the Company's corresponding deduction attributaable to
such exercise will be recognized six months after the date of exercise. The
amount of such income and decution will equal the difference between the Fair
Market Value of the shares of Common Stock at that later date and the option
exercise price, unless an election under Section 83(b) of the Code is filied by
the optioneee within thirty days after exercise, in which case the inclusion of
income and corresponding deduction will occur at the time of exercise.
Incentive Stock Options. When an ISO is exercised, the optionee will not
realize any income and the Company will not be allowed any deduction if certain
conditions regarding the optionee's period of employment with the Company are
met and if the optioneee does not dispose of the shares of Common Stock within
two years after the option was granted or within one year after the optionee
acquired the shares of Common Stock. In the event of a sale of the shares of
Common Stock after compliance with these conditions, the resulting gain or loss
will ordinarily be treated as long-term capital gain or loss. The basis to the
optionee of shares of Common Stock acquired upon the exercise of an incentive
stock option for cash will be the exercise price.
The amount by which the Fair Market Value of the shares of Common Stock
at the time of exercise exceeds the price paid for such shares of Common Stock
by the optionee will be an item of tax preference for purposes of the
alternative minimum tax.
If the optionee of an ISO fails to comply with the condition regarding
his period of employment, the optionee is taxed as if he had exercised a
nonqualified option, and the Company will have a deductible expense equal to the
compensation income recognized by the optionee. If the optionee fails to comply
with the condition regarding the holding period of shares of Common Stock, he
will be treated as having received compensation taxable as ordinary income at
the time of his disposition of the shares of Common Stock equal to the excess of
the value of his shares of Common Stock on the date of exercise of his option
over the exercise price, except that if his disposition is in an arm's-length
sale, the amount treated as compensation and deductible by the Company cannot
exceed his gain on the sale. Any gain in excess of the amount treated as
compensation will be treated as long-term or short-term capital gain depending
on the optionee's holding period for the shares of Common Stock.
The exercise of an option by the exchange of shares of Common Stock
already owned by the optionee will not result in any taxable gain or loss on the
unrealized appreciation of the shares of Common Stock so used, except where the
optionee, in payment of the option price of an ISO, transfers shares of Common
Stock which he originally acquired through a prior exercise of an incentive
stock option in violation of the holding period condition referred to above.
If the Company acquires stock options from an optionee for a cash
payment (including a deemed cash payment for the optionee's surrender of all or
part of an option in exchange for the cashless exercise of the remaining or
another option), the optionee will, at the time of payment or exercise,
recognize ordinary income equal to the amount of cash paid or deemed paid and
the Company will have a deductible expense equal to the amount of such ordinary
income.
11
Options Granted Through the Record Date. During fiscal 1997 522,750
options were granted with 13,500 options expiring due to attrition. To date an
additional 7,000 options have expired due to attrition.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the annual
meeting is required to approve the proposed amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2
PROPOSAL 3- PROPOSAL TO INCREASE THE AUTHORIZED
SHARES OF COMMON STOCK TO 75 MILLION
The shareholders of the Corporation are asked to approve a proposal to
increase the authorized shares of Common Stock from 10 million to 75 million.
Currently there are 3,796,876 shares of Common Stock issued and outstanding.
600,000 shares are reserved under the Company's 1996 Stock Option Plan as
amended and 2,090,876 shares are reserved for issuance pursuant to Common Stock
warrants issued and outstanding.
The Company believes that such an increase in the authorized shares will
needed, as the Company explores various avenues of obtaining additional capital,
whether in the form of additional equity of debt financing. Once the shares
have been authorized by the shareholders, no further shareholder authorization
will be required to issuance the shares.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the annual
meeting is required to approve the proposal to increase the authorized shares of
Common Stock to 75 million.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3
PROPOSAL 4- SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Coopers and Lybrand
L.L.P. to serve as the independent auditors of the Company for 1998. Coopers and
Lybrand L.L.P. has served as independent auditors of the Company since 1997.
One or more representatives of Coopers and Lybrand L.L.P. are expected
to be present at the annual meeting, will have an opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast at the annual
meeting is required to approve the selection of Coopers and Lybrand L.L.P. as
the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 4
12
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES AND EXCHANGE ACT
NAME NUMBER OF LATE REPORTS NUMBER OF KNOWN FAILURES
James L. Ake 2 0
Stephen B. Armstrong 2 0
John Beaudette 0 2
Peter Bordeaux 2 0
Federico Cabo Alvarez 0 2
Wyndham Carber 0 2
Corneilus Dupre' 0 0
Joseph Heid 0 2
Charles Jarvie 0 2
David Haines 0 1
Mark Halpern 0 0
Edward McDonnell 0 2
Paula O'Connor 0 0
Steven Rothstein 0 2
Steve Tebo 0 0
Susanna Townsend 0 2
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1997, which includes audited financial statements, as filed with the
Securities and Exchange Commission, accompanies this Proxy Statement.
STOCKHOLDER PROPOSALS
Any stockholder proposals intended to be presented at the Company's 1999
annual meeting of stockholders must be received no later than December 31, 1998
in order to be considered for inclusion in the Proxy Statement and form of proxy
to be distributed by the Board of Directors in connection with such meeting.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. In an
effort to have as large a representation at the meeting as possible, special
solicitations of proxies may, in certain circumstances, be made personally or by
telephone, facsimile or mail by one or more employees of the Company. The
Company also may reimburse brokers, banks, nominees and other fiduciaries for
postage and reasonable clerical expenses of forwarding the proxy material to
their principal who are beneficial owners of Common Stock.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no matters which will be presented for consideration at the annual meeting other
than the proposals set forth in this Proxy
13
Statement. If any other matters properly come before the meeting, it is intended
that persons named in this Proxy Statement will act in respect thereof in
accordance with their best judgement.
By Order of the Board of Directors
JAMES L. AKE
Executive Vice President, Chief
Operating Officer and Secretary
April 22, 1998
14
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
PROXY/VOTING INSTRUCTION CARD
This proxy is solicited on behalf of the Board of Directors of AMERICAN CRAFT
BREWING INTERNATIONAL LIMITED
for the Annual Meeting on June 10, 1998
The undersigned appoints Peter W. H. Bordeaux and James L. Ake, and each of
them, with full power of substitution in each, the proxies of the undersigned,
to represent the undersigned and vote all shares of American Craft Brewing
International Limited Common Stock which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders to be held on June 10, 1998, and at any
adjournment or postponement thereof, as indicated on the reverse side.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THE PROXY WILL
BE VOTED FOR PROPOSALS 1,2, 3, AND 4.
(Continued, and to be signed and dated on the reverse side.)
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
P.O. BOX 11338
NEW YORK, NY 10203-0338
1. ELECTION OF DIRECTORS FOR all nominees [X} WITHHOLD AUTHORITY to vote [X] * EXCEPTIONS [X]
listed below for all nominees listed below
Nominees: Peter W. H. Bordeaux, Cornelius Dupre, Mark Halpern, Paula O'Connor, Steven A. Rothstein, and Steve Tebo
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exception" box and write that nominee's name in
the space provided below.)
* EXCEPTIONS ______________________________________________________________________________________________________________________
2. To approve an amendment to the Company's 1996 3. To approve a proposal increase the number of authorized
Stock Option Plan. shares to 75 million
FOR [X] AGAINST [X] ABSTAIN [X] FOR [X] AGAINST [X] ABSTAIN [X]
4. To ratify and approve the selection by the Board of
Directors of Coopers and Lybrand LLP as Independent
public accounts for the Company for the fiscal
year ending October 31, 1998.
FOR [X] AGAINST [X] ABSTAIN [X]
Change of Address and [x]
or Comments Mark Here
The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies,
co-executor's, or co-trustees, both should sign. Persons signing as
Attorney, Executor, Administrator, Trustee or Guardian should give their
full title.
DATED:______________________________________________________, 1998
__________________________________________________________________
Signature
__________________________________________________________________
Signature
________________________________________________________
Votes must be indicated (x) in Black or Blue Ink. [x]
________________________________________________________
_________________________________________________
Please sign, date and return this proxy in the
enclosed prepaid envelope.
________________________________________________